Whether the U.S. government should be allowed to claim credit for the private philanthropy of its citizens is a hot topic in today's foreign aid debate. Overlooked in this debate, however, is a form of aid that straddles the traditional public/private divide: charitable tax expenditures. Through the many tax privileges that the United States grants to its nonprofit organizations, the government implicitly foots some portion of the bill anytime these organizations send money abroad for development purposes. Unlike official development assistance (ODA), these tax-expenditure funds are privately organized and distributed, yet unlike voluntary transfers they are paid for by the public fisc. This is not private aid; it is privatized aid. At the same time that direct expenditures on aid were falling in recent decades, these tax expenditures were rising.

The basic, descriptive goal of this Comment is to show how nonprofit tax policies have shaped the content of American aid. The broader goal is to connect this insight with the literatures on tax expenditures and international development. If one accepts the Comment's theoretical premise, then U.S. government spending on aid is somewhat larger, and substantially different in character, than most commentators have assumed. Although tax expenditures on foreign aid raise a number of concerns, they also, I contend, possess unique virtues that make them a valuable complement to ODA.